The ‘Developmental’ and ‘Welfare’ State in South Africa: Lessons for the Southern African Region

Enthusiasm for the idea of a ‘developmental state’ emerged in South Africa in the early 1990s, re-surfaced in the mid-2000s, and re-emerged yet again after 2007. The idea appealed to the statist instincts of many ANC leaders, and got momentum because of the perceived importance of shifting the economy onto a more inclusive and faster growth path. After twenty years of ANC government, however, growth remained sluggish and non-inclusive. The standard explanations are insufficient: Neither politics within the ANC nor international agreements nor state incapacity prevented the state developing interventionist industrial policies in some sectors. We offer a fourth part of the story: The preferred mix of policies associated with the developmental state in practice was inappropriate for the South African context. By encouraging capital- and skill-intensification, public policies retarded growth and inclusivity, and reproduced rather than reduced poverty and inequality. The South African state has, however, redistributed through cash transfers very efficiently. Pro-poor outcomes are more likely if the state builds on the strengths of its welfare state and avoids heavy investments in capital- and skill-intensive industry that are favoured by the would-be developmental state.